The use of foreign currency derivatives, corporate governance, and firm value around the world

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• 作者：George Allayannis^a ; ^{allayannisy@darden.virginia.edu} ; Ugur Lel^b ; ¹ ; ^ulel@vt.edu ; Darius P. Miller^c ; ² ; ^{dpmiller@cox.smu.edu}
• 关键词：Currency derivatives use ; Hedging ; Corporate governance
• 刊名：Journal of International Economics
• 出版年：2012
• 期刊代码：44_00221996
• 类别：eco
• 出版时间：May, 2012
• 卷：87
• 期：1
• 页码：65-79
• 文件大小：317 K

摘要

This paper examines the impact of currency derivatives on firm value using a broad sample of firms from thirty-nine countries with significant exchange-rate exposure. Derivatives can be used for managers' self-interest, for hedging or for speculative purposes. We hypothesize that investors can appeal to a firm's internal (firm-level) and external (country-level) corporate governance to draw inferences on a firm's motive behind the use of derivatives, since well-governed firms are more likely to use derivatives to hedge rather than to speculate or pursue managers' self-interest. Consistent with this explanation, we find strong evidence that the use of currency derivatives for firms that have strong internal firm-level or external country-level governance is associated with a significant value premium.